What Are Hard Money Lenders And How Do I Qualify

This BLOG On What Are Hard Money Lenders And How Do I Qualify Was UPDATED October 24th, 2018

What Are Hard Money Lenders?

• Hard Money Lenders are lenders who lend primarily based on the assets rather than the borrower
• Hard Money Lenders do care about borrowers’ financials and experience in real estate
• However, their main concern is the property they are lending against
• Borrower’s credit only plays a role when hard money lenders evaluate risk and good credit means lower interest rates

In this article, we will discuss and cover how to qualify for hard money loans for real estate investors.

Importance Of Equity With Hard Money Loans

Private and Hard Money Lenders need you to have a property with lots of equity. 

• Real Estate Investors who are purchasing a property, 25% of the purchase price is typically the low amount for a Hard Money Lender
• Hard Money Loans For Real Estate Investors close in 30 days or less
• The more money a real estate investor puts down on a hard money loan, the happier the hard money lender is.
• Why is that?
• The more money investors put down on a real estate purchase, it shows the borrower has more skin in the game and the less risk the lender has
• A 35-40% down payment is probably much more common
• Hard Money Lenders are not regulated by mortgage regulators and hard money and private money lenders cannot lend on owner-occupied residences

Hard money and/or private money loans are normally for investors of real estate properties.

Residential FHA Lenders Versus Hard Money Lenders

There are many rules and regulations when it comes to qualifying for FHA Loans since all FHA insured mortgage loans are guaranteed by the government against a default of the borrower.

• Homebuyers can get an FHA loan with as little as 3.5% down payment with very low mortgage rates
• This is since lenders are insured in the event if the borrower defaults on their FHA Loan

This is not how it works with hard money and/or private money loans.

What Are Hard Money Lenders & How Do They Qualify Loans

Hard Money and Private Money Lenders typically have 2 really strong safeguards when they lend:

•  A property with a lot of equity
• A borrower with a really good, common sense, well-thought exit strategy

For example, the borrower may be buying, rehabbing, and flipping a property with a $100,000 possible profit margin in a hot neighborhood.

Chicago Hard Money Lender

Gustan Cho Associates Mortgage Group is one of the nation’s most reputable hard money and commercial lenders and is known by many as a one-stop-lending-shop because there is no hard money or commercial loan they cannot do.

• The above is just one example.
• You have to think like you are Hard Money Lender or Private Money Lender before you Google Hard Money Chicago, Los Angeles, Miami, Denver, New York, Las Vegas, or La La Land
• This is because everyone lends in La La Land
• So if you want a Hard Money Loan in Chicago or one or any other city, read what the lender states they do
• If you want a Hard Money loan in Chicago, and you need a 100% of the future value of your property, Google I need a Hard Money Loan in Chicago but I live in La La Land

Remember that you need to be careful when choosing a hard money lender because they are not regulated like FHA Lenders or residential lenders who need to be licensed.

About The Author And Gustan Cho Associates

Michael Gracz is the National Sales Manager of Gustan Cho Associates. Mike is also a commercial lender with Capital Network Group Inc. 

Michael brings almost three decades of both commercial and residential lending to Gustan Cho Associates and Gustan Cho Associates. Gustan Cho Associates consists of commercial and residential mortgage professionals and real estate investors. For more information on hard money loans, please contact us at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.